Taxpayers Knowledge and Compliance: Evidence from Direct Assessment Tax in Lagos State

Joseph Ishola,Lateef Olayiwola Raheed,Abass Oyeshola Bello

doi:10.52962/ipjaf.2020.4.4.121

Joseph Ishola, Lateef Olayiwola Raheed + Show 1 more

Open Access

https://doi.org/10.52962/ipjaf.2020.4.4.121

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Abstract

The research work examines the nexus between Tax Knowledge and Tax Compliance among Taxpayers: Evidence from Direct Assessment in Lagos State. This study adopts the survey research design to elicit responses from selected taxpayers in the Ikeja Lagos State of Nigeria to explore what they perceived as the relationship between tax knowledge and tax compliance regarding tax payment and tax filing of returns. Primary data was collected through a designed questionnaire and was administered using the Kaiser-Meyer-Olkin test. Cronbach Alpha was also used in establishing the sampling adequacy and reliability of the research instrument. The survey results were collected from 200 respondents in three categories in Lagos State with 190 valid responses, including self-employed, taxpayers in public and private establishments in Ikeja from October to November 2020. The study adopted a judgmental sampling technique. The data extracted from the questionnaires were analyzed using a simple table as descriptive and Pearson Correlation at 1% Level of Significance as inferential statistics. The findings revealed that the general tax knowledge was significantly related to tax compliance in payment terms (r = .993, p =0.000) and tax compliance in terms of filing of returns (r = .986, p =0.000). thus, the study concluded that there is a positive relationship between tax knowledge and tax compliance.

Highlights

1.1 BACKGROUND TO THE STUDYOlaoye and Ekundayo (2018) stated that the government is saddled with the responsibilities for providing basic amenities and other social services for its citizens
Kupoluy, Oyedokun, and Benjamin (2017) despite all the benefits derived from taxation, as sources of funds utilized by the government for the benefit of the citizenry, it has been observed that only a minority, or few people that pay their taxes in Nigeria and these are the formal actors and those working in formal organizations that have records
This finding is the same as the study of Oladipupo & Obaeze (2016), which stated that tax knowledge (TKNOW) has a significant positive relationship with tax compliance, the study of Yan, Arokiasamy & Suat (2010) that opined that tax awareness has to be spread in order to inform all consumers about the direction and objectives the relevant tax authorities wish to achieve by administering taxation policy

Summary

Introduction

1.1 BACKGROUND TO THE STUDYOlaoye and Ekundayo (2018) stated that the government is saddled with the responsibilities for providing basic amenities and other social services for its citizens. Tax avoidance and tax evasion are frequently discussed topics on both national and European levels. Cechovsky (2018) revealed that tax avoidance and tax evasions are the two most worrisome tax crimes and related issues that any government or tax authority faces and putting all measures to defeat the abnormalities. Oloyede, Kupoluy, Oyedokun, and Benjamin (2017) despite all the benefits derived from taxation, as sources of funds utilized by the government for the benefit of the citizenry, it has been observed that only a minority, or few people that pay their taxes in Nigeria and these are the formal actors and those working in formal organizations that have records. Especially in the informal sector, would always assert that they are not cleared of Nigeria's tax position. Even when a tax consultant tries to educate them, they tend to navigate their tax discussion and education ways

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